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Question 5 A) Grand River Company makes 4,000 units per year of a part called an axial tap for use in one of its products.

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Question 5 A) Grand River Company makes 4,000 units per year of a part called an axial tap for use in one of its products. Data concerning the unit production costs of the axial tap follow: An outside supplier has offered to sell Grand River Company all of the axial taps ntreydires. If Grand River Company decided to discontinue making the axial taps, 40% of the above fixed manufacturing overhead costs could be avoided. Assume that direct labour is a variable cost. Assume Grand River Company has no alternative use for the facilities presently devoted to production of the axial taps. If the outside supplier offers to sell the axial taps for $65 each, should Grand River Company accept the offer? Fully support your answer with appropriate calculations

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